Order a free credit report
First and foremost, you need to find out what you’re working with. Credit reports may be ordered for free on an annual basis at annualcreditreport.com. You will receive one from each of the three major reporting agencies–Equifax, Experian, and TransUnion.
Dispute any inaccuracies
Go account by account and make sure the information is correct and up-to-date. Is your credit limit $500 higher than what is listed? Let them know. Does it say you made your loan payment late twice last year when you know you didn’t? Dispute it. Take a close look to make sure there is nothing fraudulent that needs to be removed, including credit applications. Also, keep in mind that anything over seven years should be removed.
Settle anything in collections
If an overdue debt has gone to collections, the bright side is the creditor will most likely accept a settlement in which you pay an amount that is much lower than you owe. Call and negotiate, see if you can have your debt canceled in exchange for 50% of it paid in a lump sum. If you cannot pay off what you have in collections, you are probably not equipped to buy a The Woodlands, TX home at this time.
Bring all debts current
Pay the total amount currently due on all accounts, from credit cards to medical bills to utilities. Once they are current, do whatever you need to do to make sure you continue to pay them on time. Mark it on your calendar or set up an auto-deduction in your checking account. Paying on time matters, and the longer you do it, the better your score.
Improve your debt-to-credit ratio
This can be done two ways–by lowering your debt and increasing your credit. Do both! Pay down whatever debt you can afford to pay down (while leaving some aside for an emergency fund and a down payment for the house, of course). Next, contact your creditors and request a higher credit limit. Once you get it, however, do not use it! That would defeat the purpose.
Hopefully these tips help as you prepare to get loan approval and start hunting for a The Woodlands, TX home. If you want to enlist professional help, do not hesitate to contact me!
Keller Williams The Woodlands